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©Syncho Research 2008 “Viplan Method”

Overview of the method as developed in Viplan Learning System

The VIPLAN Method in Linear Form 
Raul Espejo with Diane Bowling1 
Syncho 1997 
This chapter offers a linear presentation of the software Viplan Learning System
(VLS). The software includes dynamic diagrams and the content is supported by a
case study that cannot be replicated in the linear version included here. However, we
believe, that the advantage of this document is its easy reading. The text is basically
the same that is included in VLS; in some of its parts we highlight that the graphical
version of the software is superior and the advice is to visit it. Versions of the
software in English and Spanish are attached to this text.

Part 1 The VSM 
Introduction 
Part 1 offers a conceptual introduction to the Viable System Model (VSM). This is a
model of the organizational structure of any viable system. Often structure is
understood as equivalent to the organization chart. Since there is a significant
distinction between a formal structure, as implied by this chart, and an informal
structure, as reflected by the way people relate to each other in their day-to day
activities, many people think that the organization chart is a poor instrument to
observe organizations. This VSM offers a more sophisticated model of organizational
structure, one which is not only concerned with lines of authority, but with the way
people relate to each other in their daily work. Today, the trend is to replace
hierarchies by networks. However we think that this change often does not account
for the huge complexity of organizations. Here, we argue that organizational viability
requires complex, adaptive structures. We call them recursive organizations.
The organization chart, Figure 1, is a model that reduces the complexity of an
organization by describing only relationships of authority and accountability. Those at
the top define tasks; those at the bottom are the doers. The links between them define
the chain of command.

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Viplan Learning System should be referred as follows: Espejo, R with D, Bowling (1997) The Viplan Learning
System, Syncho Ltd. (www.syncho.com). The following information is included in the software Viplan Learning
System: “The Viable System Model is the intellectual property of Stafford Beer. Viplan is the intellectual property
of Raul Espejo. The Viplan book was written by Raul Espejo and Diane Bowling of Syncho Ltd. The tutorial was
implemented by Diane Bowling based on previous work of Oleg Liber of ICTU. The Software offers Espejo’s
interpretation of Stafford Beer’s Viable System Model (VSM). Beer does not agree with aspects of this
interpretation such as the account given in Viplan of System 2 and System 3 (the coordination function and
cohesion function in Viplan). Espejo takes full responsibility for the content of Viplan that although undoubtedly
based on Beer’s VSM offers only his views about the model and its use”.

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©Syncho Research 2008 “Viplan Method”
Overview of the method as developed in Viplan Learning System

Figure 1 The organisation chart – hierarchy

In organizations, often hierarchy means that the viewpoints of most of those in the
organization have little relevance. They are there to carry out the tasks defined for
them by those at the top. This may reduce the organization’s ability to create its
environment and to respond to threats and opportunities in this environment.
This is a scenario in which human resources are likely to be under-utilised.
Nevertheless, an organization chart provides an overview of formal relationships. This
information is often valuable for beginning to unravel the way an organization works.
The Viable System Model (VSM) is a different model of an organization. This is a
model of the structural requirements for organizations to maintain their independent
existence, that is, their viability. The model helps to:
(a) diagnose organizational structures, in particular their structural weaknesses;
(b) to design new organizational structures;
(c) to assess structural weaknesses underlying specific problem situations.

The VSM focuses attention on the enormous complexity that, we argue, is inherent to
organizations. A job of management is to manage this complexity.
The model looks like Figure 2. However, before looking at the VSM in detail, we will
study the management of complexity. This is a key concept necessary to understand
the model.

Figure 2 The Viable System Model

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©Syncho Research 2008 “Viplan Method”
Overview of the method as developed in Viplan Learning System

Chapter 1 Organization, Structure and Viewpoint 
Organizations 
In an organization people carry out tasks. For this, they are constantly communicating
and using resources. An institution like a company or a government agency may not
be an organization if people outside the institution give closure to their interactions.
Giving closure to interactions implies that people create their own meanings and take
responsibility for the outcomes.
In the same way that a house is made up of bricks in particular relation to one another,
the structure of an organization is made up of people in particular relation to each
other. The relation between people and resources defines the structure of an
organization. This structure can be modelled. A model of the structure of a house is
the blueprint. A common model of an organization’s structure is the organization
chart, which highlights hierarchical relationships. Another, the one developed here, is
the Viable System Model.

Figure 3 Cross functional relations

Performing tasks in organizations requires cooperation. It is natural for these tasks to
be highly interconnected, yet structures like those based on the organization chart tend
to fragment them. Companies that do not support cross functional relations frequently
encounter problems like the one in Figure 3. Functional structures may lead to a
narrow approach to organizational issues.
We can carry out many tasks on our own, but there are many reasons why people may
wish to come together and share work and/or work alongside others.
Organizational tasks are generally highly complex. There are many complexity
drivers, as the following non-exhaustive list shows:
Task requires more knowledge areas than one person can hold
We are constantly demanding more complex goods and services
The task requires more knowledge depth than one person can acquire
We need to cooperate with many others who do not see the world with the same eyes
We need to take care of the environmental effects of our tasks
We are dealing with a wide range of markets
We need to catch up with fast moving technologies
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©Syncho Research 2008 “Viplan Method”
Overview of the method as developed in Viplan Learning System
We have access to wider geographic diversity
The physical dimensions of task are larger than one person can handle

Working out complexity drivers for any organization depends on purposes people
ascribe to it. However, the purposes we ascribe depend on our viewpoints.
Viewpoint 

Figure 4 Viewpoint of the observer

Different observers see different things in the same situation. Depending on the
viewpoint of the observer, the purpose ascribed to an organization may differ. For
instance, as the picture in Figure 4 implies, whilst one person may see producing cars
as the obvious output of the factory, another may see environmental pollution as its
output; both may apparently be looking at the same thing but their different concerns,
histories and values are responsible for very different mental constructs. Ascribing a
shared purpose to the organization, with the participation of all its relevant
viewpoints, is a way of focusing its concerns and therefore a means of working out its
complexity drivers. Relevant viewpoints are those of the stakeholders. For instance,
the purpose of producing cars within acceptable environmental standards may be a
shared outcome of the stakeholders’ interactions. A person may have one or several
viewpoints about a particular issue, so may a group of people.
Chapter 1 Summary 
Organization 
Organizations are closed networks of people in interaction; they have identity and
structure. An institution like a company or a government agency may not be an
organization if people outside the institution give closure to interactions.
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©Syncho Research 2008 “Viplan Method”
Overview of the method as developed in Viplan Learning System

Structure 
Structure is defined by the relations constituted by the specific resources (e.g. people
and physical resources) producing the organization’s relationships. The same
relationship may underpin different relations.
Complexity 
Complexity is the outcome of people in interaction. It is produced by their different
viewpoints, by the demands of their shared environment and by the interactions they
want to develop with others; each is a source of complexity.
Organization’s purpose 
Organizations have no purposes of their own, it is people who have and ascribe
purposes. Sharing statements about ascribed purposes is a way of making an
organization’s complexity more understandable.
Chapter 2 Management of Complexity 
Complexity 
Complexity surrounds us. The organizations we work in are hugely complex. The
environment of those organizations is likely to be more so. The management of an
organization is accountable for its overall task performance. Yet quite naturally,
managers are unable to be involved in everything personally, let alone to carry out all
the tasks of the organization. Managers must work through other people. To do this
they must manage the complexity of these relations.
We represent the organization by a circle. We represent the environment by a cloud. It
is bigger than the organization and surrounds it. We represent management by a
square, embedded in the organization.

Figure 5 Management of Complexity in Organizations

An organization may exist in a highly complex environment in which its people can
create a wide range of...
- markets
- ideas
- technologies
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viable.competitors . the capacity to steer the organization depends on the functional capacity of management.opportunities by interacting with: . more is likely to happen in the environment and the organization than the organization and management can cope with respectively. The environment may offer a wide range of opportunities and threats to any organization. and management has to find strategies to cope with three rather than one complexity driver.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System . On the other hand. or in more general terms.customers .shareholders. In this illustration. Figure 6 Relative complexity The arrows in Figure 6 illustrate this relative complexity. Assuming that all these complexity drivers have to be handled in order to remain competitive.suppliers . in any case. the organization has only four responses to handle the seven complexity drivers in the environment and management has only one response to handle the three complexity drivers in the organization. that is. But. The arrangement of these functions is part of the organization’s structure and we will discuss this in later chapters. The VSM offers a way to do this. Each of them is more complex than the other side of the interaction.collaborators . the organization has to find strategies to cope with seven rather than four complexity drivers. Our next concern is to discover strategies to overcome these imbalances of complexity. 6 . on the capacity of managers and the functions or services supporting their action. It is potentially highly complex.

which in turn is part of the environment. Of course this does not imply that managers never interact directly with people in the environment. There is an apparent contradiction: on the one hand the relevant complexities of the environment and implementation are de facto larger than the complexities of implementation and management respectively. otherwise the environment will overwhelm the organization.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Now we introduce an important diagrammatic convention. We have said that the management of an organization is part of that organization. thus enhancing the organization’s understanding of this environment. and to amplify 7 . and those implementing must remain in communication with the environment. The circle now becomes implementation – the part of the organization that produces its products. Implementation must develop strategies to manage all the relevant complexity of the environment. otherwise implementation will be out of control. To study the management of complexity between the three. Strategies to overcome this apparent contradiction are fundamental to the VSM. we move them apart diagrammatically (see Figure 7). Management must remain in communication with those implementing its tasks. On the other hand. This model helps us see how to use organizational communication links with the environment to attenuate its complexity. This law applies both to the relation between management and implementation and the relation between implementation and the environment. Management communicates with the environment through implementation. it implies that they depend on the complexity of implementation to close the loops they open with the environment. = Amplifier =Attenuator Figure 7 Management’s communication with the environment An important law is: The Law of Requisite Variety (Ashby’s Law): Only variety absorbs variety. these complexities have to match each other for viability. Management must develop strategies to manage all the relevant complexity of implementation.

implementation and management are common and must be managed. Equally. it does not help to have action capacity if there is no adequate understanding of the environment. The VSM helps to focus on these interactions and design them to make the organization more effective. the cost of this ignorance may be lower (inadequate) performance or loss of control. These amplifiers and attenuators exist in one form or another. the most common amplifier being delegation and the most common attenuator being sheer ignorance. thus making the interaction with this environment more effective. Figure 8 Management of complexity simplified  Imbalances in complexity between the environment. It does not help to understand the environment very well if there is no action capacity (amplification). Fortunately for the organization and management much of the relevant environmental complexity and organizational complexity can be. or residual variety of the environment and implementation. Amplification and attenuation links will be diagrammatically simplified in Figure 8. The problem is not being ignorant. soaked up through self-organization and self-regulation in the environment and implementation themselves. Interaction of implementation with the environment and of management with implementation requires considering attenuators and amplifiers as the two sides of the same coin. we are all ignorant! It is being ignorant of the things we cannot afford to be ignorant of. The remaining complexity. and to a large degree are. People supported by enabling resources as they go about their daily work carry out amplification and attenuation. it helps us see how to implement tasks with only minimum management interference (through amplifiers and attenuators) to ensure organizational cohesion. must be balanced by the ability of the organization and management to respond.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System the organization’s action capacity. 8 .

which is not managed in the environment itself. These are critical success factors for management. must be managed by the organization otherwise performance suffers. This unfolding of complexity is the outcome of self-organization. customers doing work for the company.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 9 Imbalances in complexity   In Figure 9 seven arrows or complexity drivers represent the environmental complexity. Unfolding of Complexity  A strategy to manage organizational complexity is self-organization. in practice this implies the emergence of autonomous units within autonomous units (see Figure 10). They are critical success factors for the organisation. areas in which high performance is necessary in order to achieve organizational cohesion. Benchmarking.e. necessary performance. Examples of self regulation in a company’s environment i. which allows to supply the company just in time. The residual complexity. suppliers doing the work of the company’s logistics through Electronic Data Interchange (EDI). this capacity may relate to any function like R&D. In this diagram there are three complexity drivers in implementation.e. production of goods and services and so forth. The organization needs to develop functional capacity to cope with this residual variety. The residual complexity of implementation is the complexity that is not absorbed locally by self-regulating autonomous units and therefore relates to unresolved local problems and the managing of the interfaces among all these units. This strategy is natural to any (complex) successful viable organization. Management has to create the context for integration and coordination of all the autonomous units in implementation. Examples of self-organization and self-regulation in implementation are given by all kinds of teamwork with local problem solving capacity on the shop floor. are: bank customers using high street automatic teller machines. market intelligence. that is. they are areas in which it must perform well in order to succeed. i. that is. helps to work out the level of this residual variety. ‘Autonomous teams’ and 9 . sales. this is the level of response it has to cater for.

This unfolding differs from an organization chart in that it illustrates a global organisation containing local autonomous organisations (primary units).©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System ‘teams within teams’ are instances of this general proposition. Within the organization are the embedded primary units. and so on. This is a top-down description of complexity unfolding. The complexity of organizational tasks implies autonomous (self organizing) units within autonomous (self organizing) units – viable systems in their own right. rather than a relationship of authority between managers and subordinates. each with their own management. The VSM looks at organizations in this way. We can explode one of these units diagrammatically. if sufficiently complex. Indeed the organization in focus usually is a primary activity of a larger organization. This process continues for any further embedding necessary to handle the complexity of the organization. A bottom-up description makes apparent that the autonomous tasks of individuals or small teams need to be integrated in a cohesive larger organizational unit. without loss of autonomy. they are the ones producing the products and/or services of the organization for its customers. Each organization has its own relevant environment. until the full complexity of the organization’s task is absorbed. in order to implement the total task of the organization. will have further primary sub-units. This cascading unfolding shows the organization and its embedding environments alongside one another (see Figure 11). When examining an organization we unfold its complexity showing only the organization and its embedded primary units. These viable systems (primary units). Exactly what form these units take varies from organization to organization. with their own management. The environment for each level is not shown and the embedded primary units are exploded for ease of explanation (see Figure 12). In general we refer to these units as the organization’s primary activities. This unit has an environment that is embedded in the environment of the whole. 10 . Complexity unfolding is often the result of performance pressures and natural efforts to achieve viability in complex environments.

©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 10 embedded unfolding Figure 11 cascading unfolding 11 .

those resources coordinating and integrating the primary activities into a cohesive whole are called regulatory functions. Chapter 2 Summary  Management of Complexity  This chapter has introduced a way of thinking about managing complexity implied by organizational communications. we call them secondary activities.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 12 complexity unfolding. and . into a larger organization. The high complexity side in any communication has to absorb most of its own complexity. It is important to distinguish between these regulatory functions and those support functions that are not regulatory but ‘producing activities’ focused on the primary activities and not on the business customers. Within each unfolded primary activity of the whole organization there is a set of regulatory functions that provide this functional capacity. as a primary activity. Primary activities and regulatory functions  In Viplan. Residual complexity  But by and large. their quality can be improved by designing effective attenuators and amplifiers of complexity. See Trident for examples. leaving a manageable residual complexity as part of the communication itself. managing complexity relies on self-regulation and self-organisation.cope with environmental complexity.integrate this organization. 12 . These are the functions of an organization that support and enable its primary activities. and provide functional capacity to: . They are not businesses of the organization.develop organizational cohesion .

Now it is easier to illustrate that the organization’s management must communicate: . management is part of the organization. functions enabling the cohesion of primary activities and managing their performance and the performance of the total organisation are called regulatory functions. Management is managing the organization’s value chain. and. Primary activities and regulatory functions  Tasks producing the purpose of the organization are called primary activities. these have been separated for ease of expression in Figure 13. . this is what we call development management.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Complexity unfolding  In complex organisations autonomous units emerge within autonomous units. 13 . Figure 13 Performance Management  A further modification is made in the drawing of the VSM in Figure 14. which in turn is part of the environment. each relates to total tasks that are parts of larger total tasks. this is what we call cohesion management. but the ability of the organization to implement its tasks.with the environment. Chapter 3 The VSM  Performance Management: value chain and the environment  Management manages the organization’s overall performance in its environment. in practice this implies the creation of different communication spaces. The circle no longer represents the organization as a whole. Structurally.with implementation. as said before. Diagrammatically.

the synthesis of development management and achievement management. We call the management responsible for the integration of implementation resources. management has to ensure the cohesion of the organization’s inner activities. Cohesion Management: the mechanism  The implementation-environment interactions define the organization’s achievement in its current environment. is key to this interaction. To achieve good results. managing its inbound logistics. that is. Cohesion management develops amplifiers and attenuators to enable effective value chain management. Managing the organization’s production value chain. ‘cohesion management’. management communicates. its production activities and its outbound logistics. Performance management is the total management of the organization in its environment. Trident gives examples of these. In an organization. This is the management of the organization’s value chain.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 14 Performance Management Also. many roles may carry out cohesion management activities. that is. This relation between implementation and the environment is what we call achievement management. through implementation. with the environment. 14 .

implementation and relevant environments with their own amplifiers and attenuators. these units are part-of the whole organization and. that is. giving commands to primary activities and asking for reports confirming their status. The one illustrated in Figure 16 has two. are managed by the organization as a whole. primary activities. cohesion management is often misunderstood as ‘command and control’. Whilst autonomous. Cohesion management is responsible for the effective use of resources. As autonomous units. 15 . in the interests of cohesion. Below we illustrate the Control Dilemma in order to explain common problems encountered in cohesion management. it is accountable for the primary activities 1 and 2 in Figure 16. How cohesion management is exercised is of particular significance to organizational achievement. We think that in organizations structured as hierarchies. As such. they each have their own management. Look at Trident for further explanations. within them.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 15 Cohesion Management Organizations are too complex to be managed completely from the top. As has been said before most organizations have autonomous units.

this becomes a problem if it is the main communication mode between cohesion management and its primary activities. In a changing environment it is important that primary activities can respond rapidly to their relevant environments. However. eating into primary activities’ flexibility. there are more and more things happening in the primary activities of which they are not aware. as time passes. Cohesion management must. They issue more commands and demand more reports. This may lead to a sense of unease in corporate management. they are forced to respond directly. therefore. achievement as well as overall performance will suffer. be far more sophisticated than a simple command and control mechanism. Management feels the need to take firmer control. if the controller’s response leads to less flexibility in responding to environmental demands. This is occurring precisely when more effort is needed to deal with increased environmental complexity. 16 . This leads to a situation where. Management intervention will usually be part of cohesion management. to more and more changes in their local environments.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 16 Control Dilemma   Since primary activities are embedded in increasingly complex external environments. more of the primary activities’ resources are spent in dealing with control requests and less with environmental complexity. However. in relative terms. possibly without consulting.

but also engender the feeling in primary activities that cohesion managers care about them. often managers feel they don’t have enough understanding of the situation and ask for more information. by developing monitoring channels (see left-hand channel of communication in Figure 17). cohesion management depends on using monitoring channels. as said before. They should be made public to people in the organization. An alternative is to enrich their understanding of primary activities. the annual budgeting cycle employed by companies. They may include such activities as financial and safety audits. by-passing their local management. cohesion management and the management of primary activities need to get engaged in some form of resource bargaining for instance. Well-developed monitoring channels not only provide information to cohesion managers. Therefore. otherwise they may overload management. as well as ad hoc meetings with people in the organization and visits. These reports must be low variety. But reducing the use of the resources bargaining central channel implies the need for communication channels among primary activities for them to solve locally common 17 . they must control resources of their own.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 17 Cohesion Mechanism If primary activities are to be autonomous. However. creating the control dilemma. To achieve a shared understanding of accountability reports and gain a better understanding of the organization as a whole. The bargaining processes also require accountability reports (see central channels of communication in Figure 17). These channels are essentially high variety and sporadic communications between people in cohesion management and people within the primary activities. Organizations not only have limited resources but the way these resources are distributed may vary according to strategic and technological considerations.

The management function that does this is referred to as the intelligence function in the VSM. whatever direct supervision is necessary from the centre it should be there to assist those working in the primary activities and NOT to command them. Management must maintain communications in both directions. The complexity of management is much smaller than that of the whole organization. much of the cohesion management of an organization is to ensure that work is carried out everywhere in similar ways. However. using similar standards. these are interactions of mutual adjustment between primary activities. This section illustrates the mechanism to increase the chances for this kind of viability. It also needs to consider environmental changes and create new forms of operation and develop new possibilities. with the organization’s implementation and with the environment in which the organization is embedded. requiring a context for their coordination and not their external control. so this communication must involve amplification and attenuation working together. are to manage the value chain and to maintain the cohesion of the organization as a whole. Much coordination can take place through mutual adjustment and agreements among primary activities rather than by direct supervision (see right-hand channels in Figure 17). It is not enough for the organization to achieve good results in a given environment. supported by monitoring and coordination channels. that is. Cohesion management is only concerned with managing the ‘inside and now’ of an organization. The complete mechanism for Cohesion Management – the cohesion mechanism – consists of resources bargaining and management intervention. giving the primary units more discretion to respond to the environment whilst ensuring overall cohesion. Balancing the ‘inside and now’ with the ‘outside and then’ is the concern of development management and for that. so this communication must involve amplification and attenuation working together. Development Management: the mechanism for adaptation  Development management is concerned with organizational changes in order to achieve viability beyond survival. However. the VSM offers the mechanism for adaptation. this is insufficient for its long-term viability. Taking responsibility for these changes may imply identity changes. in the relationships and tasks defining the organization. The complexity of the environment is larger than that of its embedded organization. The better designed these channels are. the less reliant the organization will be on the central channel. Often. We referred to the management function that aims at achieving operational results and cohesion as the cohesion function in the VSM. The purpose of these communications is to understand and influence the future external environment of the organization. 18 . The purposes of these communications. For this it needs to be sensitive to environmental changes and furthermore to possibilities of producing desirable changes.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System problems without the need for a third party (usually people in cohesion management). managing the ‘outside and then’ of the organization is equally important to ensure a viable organization. This reduces the chances for oscillation between primary activities and ensures that work flows easily between them (particularly when they are closely interrelated). as said before. This is at the core of organizational learning and transformation. By and large.

as well as effective interactions between them. Structurally. they need to be richly interconnected. within the framework of its values. 19 . Debates between these viewpoints should lead to the vetoing of weak proposals from the perspective of one or the other viewpoint. Moreover. and therefore. communicate with both the environment and implementation. policy is of much lower complexity than intelligence and cohesion management. that is. all within the guidelines of the policy function is the Mechanism for adaptation. Figure 18. vision and mission as produced by the organization’s policy function. therefore. It makes sense for policy to consider alternatives only after they have passed the intelligence and cohesion veto. Look at examples of control and intelligence roles in Trident. People in policy activities cannot handle the same level of detail as those in the other two functions and therefore should not get involved directly in the details of either. These debates occur in the organization as a whole.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Management must. resources representing in these interactions the views of intelligence and cohesion need to be more or less of the same complexity. beliefs. including their own. This way policy makers are using the organization’s capabilities. to informed conclusions. Policy sets the context within which they work and therefore it monitors conversations between them (see Figure 18). For particular issues of organisational significance. to the best of their abilities. Structural requirements for effective organizational development are balanced resources allocated to the organization’s concerns with the ‘outside and then’ (intelligence function) and the ‘inside and now’ (cohesion function). they need to provide effective checks and balances of each other. Figure 18 Mechanism for adaptation The structural mechanism to achieve balance between the ‘outside and then’ and the ‘inside and now’.

to avoid overwhelming the policy function with information. rely on briefings and reports produced for them by others in the organization. mission and vision. Therefore. most of the time the people providing this capacity are distributed across several units. Cohesion manages the complexity generated inside the organization by its operations. in order to discharge these responsibilities.g. .g. intelligence needs to interact with those concerned with the ‘inside and now’. More about the policy function  Policy is responsible for: . This allows many issues to be discussed. To avoid overwhelming the policy function. Although the main function of some units (e. Intelligence creates and manages the organization’s ‘future’ environment.e. and as cohesion people interact with intelligence people they filter out ‘inside and now’ information irrelevant to the policy process.defining and modifying the organization’s purpose. and is focused on the ‘inside and now’ of the organization.allocating the resources to intelligence and cohesion to achieve effective interactions. the intelligence function does not map easily on to the organization chart. . For this they need to have a good grasp of: - who provides intelligence and who provides cohesion functional capacity for each policy issue in the organization. resource) of the organization that is focused on the ‘outside and then’ is part of the intelligence function. resolved and dissolved from both intelligence and cohesion perspectives before they reach policy makers. - . Although some units may have cohesion as their main function (e. More about the cohesion function  Cohesion is responsible for the operational management of the organization. cohesion needs to be richly connected with the intelligence function. To get the most out of these briefings they have to orchestrate organizational interactions (cf. It is important to recognize people’s intelligence activities and how they interact with the rest of the organization’s activities. mechanism for adaptation).which resources are required to achieve a balanced interaction between intelligence and cohesion and - how to bring them together as necessary. Thus. it is more likely that people distributed across several units will provide cohesion capacity. with the cohesion function. R & D) is to provide intelligence capacity for the organization. that is.adjusting policies as necessary Usually policy makers. 20 . Recursive Management: distribution of management capacity  Combining the adaptation and cohesion mechanisms gives the complete VSM (see Figure 19). finance). Trident shows an example of the mechanisms for development management and cohesion management together.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System More about the intelligence function  Any functional capacity (i.

cohesion. the VSM is recursive as is explained below. each has to have the same systemic functions of policy. Indeed. cohesion. intelligence. The organization structure as modelled by the VSM is recursive. The five systemic functions – policy. This continues to the lowest level of complexity unfolding in the organization. in addition to these two mechanisms. coordination and implementation – are always present in viable systems. each primary activity requires functional capacity for development. the same structure that applies to the organization as a whole applies to each of the primary activities (see Figure 20). each of them must be a viable autonomous unit in order for the whole to increase its chances for viability. cohesion and performance management.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 19 Complete VSM However. coordination and implementation at a number of structural levels. 21 . In other words. intelligence. intelligence. coordination and implementation. As each primary activity is (ought to be) a viable unit as well. Trident illustrates recursion. By clicking on parts of the models in Trident you can see examples of the recursivity of policy. cohesion.

from the enterprise itself to the smallest autonomous team in the shop floor. Development Management: Adaptation  An organization needs flexibility and capacity to change and transform itself over time in order to maintain viability. We talk about recursive management. has to develop short and long term concerns. To do this. The purpose of cohesion management is improving communications in order to align the purposes of primary activities with those of the organization. concerned with creating their future and performing effectively as a whole business. highly distributed organization with cohesion and capacity to operate effectively in its environment. the production of value for their customers. Cohesion Management  An organization’s performance will improve if it creates conditions for cooperation among its participants. it needs policy processes that balance the ‘inside and now’ with the ‘outside and then’. For this. they have to manage their interactions with suppliers and customers. Each has to have an entrepreneurial outlook. This implies that each primary activity. The managerial implications of this model are significant. Performance management is the synthesis of both aspects of management. that is.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 20 Recursion All mechanisms of the VSM appear at all levels of recursion. For this they need to create possibilities. 22 . The VSM defines the structural requirements to achieve a non-hierarchical. Chapter 3 Summary  Performance Management  Organizations need to manage their current environment. They also need to manage their future environment.

Its purpose is what it DOES. 2 Structural modelling: Offering structural criteria to break the organization’s primary transformation into smaller tasks. It is not fixed. 23 . These tasks define the organization’s unfolding of complexity. this implies an ‘entrepreneurial’ structure. a number of different structures may be relevant. that is. that is. as seen from a particular viewpoint. Stakeholders articulate identity.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Recursive Management  The above three managerial concerns apply to all primary activities in the organization. The stakeholders articulate purposes and reach agreements about them. we now need to use it in the context of specific organizations. Summary of the Viplan Method’s activities:  1 Establishing the organization’s identity: Making clear what the organization is about from a particular viewpoint. the processes producing its products and/or services. Whether an organization’s structure is effective or not depends on its alignment with the organization’s strategy. These structural criteria depend on the organization’s strategy. Chapter 4 Identity  Identity and Purpose  Identity defines what an organization IS. The VSM is all about recursive organizations. Mode I studies an existing organization. Part 2 The Viplan Method  Introduction  Having explained the Viable System Model. It is descriptive and permits diagnosis. It is prescriptive and the design depends on strategy and expert knowledge. Viplan can be used in two modes to study organizations. 4 Modelling distribution of discretion: Allocating resources and discretion to primary activities. The Viplan Method to Study Organizations looks at the structure of an organization starting from these purposes. In particular it is useful to reach agreements as to which are the organization’s primary activities. Stakeholders’ purposes give meaning to these relationships. The Viplan Method is a tool to assess the structure with reference to the strategic implications of its ascribed purposes. the organization’s primary activities. defining the functional capacity of primary activities. that is. Mode II designs an organization. It changes as the stakeholders constitute new relationships. These agreements help stakeholders to align purposes and to coordinate their actions. Defining the organization’s primary transformation. Since different purposes can be ascribed to the same organization. 5 Modelling the organization structure: Mapping the allocation of resources onto the VSM and identifying structural issues. with short and long term concerns throughout it. This chapter explains identity based on our earlier discussions about purpose. 3 Modelling structural levels: Identifying the tasks management wants to make autonomous at several structural levels.

money and goods. the related organizational processes and the stakeholders. In fact. These stakeholders are not just the employees and owners of the organization. Participants include all stakeholders and also those who influence the organization’s transformation without taking part in it directly. This purpose is transformed into purpose-in-use if resources are structured to make it happen. Stakeholders  All organizations have stakeholders. Supermarket  Employees – An organization to provide full-time and flexible part-time employment. The emergent interactions as this structure in produced produce the organization’s identity. This chapter helps to make the link between these purposes. The VSM offers a heuristic to relate resources to a strategy in order to produce a requisite structure to achieve this strategy. Types of Participants Including Stakeholders  - Those carrying out the work. they are negotiating their views all the time. Beyond stakeholders. Vision and mission help to establish the organization’s desired purpose. mission and strategy. The identity of an organization is defined by the relationships between those structuring the organization.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Managers are often exhorted to define their organization’s vision. Each participant views the organization differently. 24 . The ideas of stakeholders and participants are illustrated with reference to a car company. which often becomes the managers’ espoused purpose for the organization. The key tool is naming systems. Poverty Relief Charity  Volunteers – An organization to relieve poverty though the donation of time. In this chapter we offer methodological help to work out who these stakeholders are and the purposes they see in these interactions. People ascribe multiple purposes to their organizations. - Those providing the organization with resources - The beneficiaries and victims of the organization’s activities - Those managing the organization - Those with an influence on the organization The following are examples of possible participants’ viewpoints about a car manufacturing company. but Viplan recognises FOUR main types of stakeholder. a supermarket and a charity: Those carrying out the work  Car Company  Employees – An organization to provide jobs for skilled car makers. but also those who provide inputs to or receive outputs from the organization. Who they are varies. we also identify participants on the organization’s transformation. a supermarket and a charity.

©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Paid Staff – An organization to relieve poverty by the best use of donated money. Farmers – An organization to buy fresh produce in bulk at a discount price to sell to the general public. Supermarket  Grocery Manufacturers – An organization to distribute goods geographically to final customers. Suppliers of bought goods – An organization that buys our goods. Supermarket  Managers – An organization to retail groceries in a catchment area. Those managing the organization  Car Company  Managers – An organization requiring high levels of technical. Supermarket  Householders – An organization to provide locally. Those providing the organization with resources  Car Company  Parts suppliers – An organization requiring parts made to price and on time Machine maintainers – An organization requiring their machines maintained by our staff to an agreed schedule. 25 . goods and services. Drivers – An organization making cars for private use. Poverty Relief Charity  The poor – An organization to provide us with goods and services otherwise not accessible. Fleet uses – An organization providing cars in volume at a discount for fleets. Poverty Relief Charity  Donors of goods and money – An organization to give money to help others and save conscience. a wide range and choice of groceries. The beneficiaries or victims of the organization’s activities  Car Company  Distributors – An organization supplying cars for us to sell to the public under their terms. managerial and selling skills to produce and capture a significant part of the car market. Poverty Relief Charity  Trustees – An organization to carry out the mission of the charity. at convenient times.

We can also name systems for regulatory functions. In the VSM language the car company. The descriptions of the organizations above are brief. The latter. It is an autonomous business in the retail industry. formed by people from different units carrying out a joint process. are resources allocated to a primary activity for its management and/or development. This is the system that they are running. Primary activities and regulatory functions may also be ‘informal’ units. they are all recognised as autonomous organizations in the framework of their larger industries or sectors. Shareholders – An organization providing a return on investment by working in food retailing. These descriptions need to be made more explicit. Those with an influence on the organization  Car Company  DTI – A car manufacturer who provides employment and contributes to the balance of payments. as said before. Supermarket  Competitors – An organization working in the same business and competing on price and service. Ecology lobbies – An organization producing vehicles that increase congestion and atmospheric pollution. The supermarket is a primary activity. 26 . They make a stab at naming the system as seen from a particular viewpoint when a person observes the company. recognised as an autonomous and hopefully viable business over time. Poverty Relief Charity  Government of charity’s home – An organization conforming to the country’s charity laws. the supermarket and the charity are primary activities.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Managers – An organization to carry out the mission of the charity and provide charity workers with employment. That is. The manager’s viewpoint is shown in Figure 21. This is the case of virtual primary activities or virtual regulatory functions.

©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 21 Naming supermarket The accounting department. Sometimes they may even be external resources. to support its management Figure 22 Naming accounting department Both primary activities and regulatory functions may not relate to existing formal organizational units. This regulatory function is not just carried out by the formal scheduling office. such as a company or a department. It has been set up to ensure that the money passing through the company is correctly handled and that the accounts are in order. is seen as one of the regulatory functions necessary to run the supermarket as a business. Often they relate to specific processes and the resources supporting them may be distributed in different parts of the organization. it also involves people from 27 . The example in Figure 23 is of production scheduling in the car company. Figure 22.

Checkland. in order to achieve purpose Z. 28 . to provide a profit to shareholders and wages to employees (Z). Systems Practice. dispatchers and the production staff. by developing schedules for the company as a whole which are translated into local schedules for the workforce at all levels (Y). Accounts Dept from the viewpoint of the managers: A system to provide financial control for the supermarket (X) by ensuring that all transactions and monies are accounted for and financial costs of documents produced (Y) so that the supermarket management is aware of its financial position (Z).©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System different parts of the organization. to ensure correct deliveries can be made on time (Z). Figure 23 Naming virtual regulatory function Naming Systems  Viplan uses a formal method to name systems (cf. by means of Y. purchasing staff. including schedulers. These names are used to refer to an organizational system from a particular viewpoint. Systems Thinking. P. Wiley 1981). Look at Trident for further examples of this. Examples: Supermarket from the viewpoint of the managers: A system to provide groceries in small quantities to individual consumers at locally convenient outlets (X) by buying in bulk from worldwide manufacturers and farmers and distributing them (Y).. Different people may name the same organization differently. in order to make explicit what the system does (do X). Car Production Scheduling from the viewpoint of the production staff: A system to translate customer orders into goods (X).

The actors. suppliers.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Each named systems implies a transformation carried out by the system and a network of people involved in making that transformation happen. customers. TASCOI and Identity  Viplan Method to Name Systems  Each name implies a particular system’s transformation as well as relevant actors. customers. A Primary System – The Supermarket  A system to provide groceries in small quantities to individual consumers at locally convenient outlets by buying in bulk from worldwide manufacturers and farmers. reduces the possibility of misunderstandings. Trading Standards Office. Customs and Excise   Regulatory System – The Supermarket Accounting Department  A system to provide financial control for the supermarket by ensuring that all transactions and monies are accounted for and financial control documents produced so that the supermarket management is aware of its financial position. grocery manufacturers Local consumers The management of the supermarket Competitors. These are names of a primary activity. owners and interveners are the people who should be involved in the transformation. Making the underlying transformation and the network of relationships explicit. 29 . We use the mnemonic TASCOI to make explicit transformation and participants: TASCOI  Transformation Actors Suppliers Customers Owners Interveners What inputs are converted into what outputs? Who carried out the transformation? Who supplies the inputs? Who receives the output? Who must ensure that the transformation is carried out? Who outside the system influences the transformation? TASCOI highlights the different ways in which the participants relate to the system named. These are the participants. and distributing them to provide a profit to shareholders and wages to employees T A S C O I Internationally bulk purchased groceries are transformed into groceries available in small quantities locally All employees of the supermarket Farmers. suppliers. consumer associations. Now look at the three systems named before and the TASCOI for each of them. owners and interveners. a regulatory function and process across units. The transformation statement clarifies what the system does in the view of the person naming it.

T A S C O I Information concerning customer orders into scheduling information Members of the scheduling department. managing director of supermarket   Cross Unit System – The Car Co Scheduling  A system to translate customer orders into machine schedules by developing procedure for the company as a whole to translate customer orders into local schedules for the work force at all levels. At best an identity statement for an organisation may establish the following aspects: • The products or services produced • The technological processes used • The customer needs satisfied by its products and services • Time • Location • Size • Life cycle of products and services • Key environmental issues • Related organizations • Economic variables • Financial variables For particular organisations not all of these aspects may be relevant. quality personnel. senior managers Look at the Trident examples. computer manufacturers Supermarket managers. Thinking about the relations between participants helps us to understand the identity of the organization. the name is the organization’s identity statement. 30 . For primary activities. other departments Accounts manager Accounting standards bodies. These may not all belong to the owner’s team. In other words. sales personnel. It defines their transformations and the various participants. Production department personnel. It may be that the owner is the head of the scheduling department or it may be the head of production. also those scheduling orders from day to day around the plant.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System T A S C O I Financial transactions are transformed into financial control Members of the accounts department Other departments with information. the TASCOI of an identity statement highlights the relevant participants of the organization so that their relationships can be more fully examined. to ensure connect deliveries can be made on time. Those collecting customer orders Those producing the goods The ownership of a system such as this is often not recognised or is disputed.

In Mode I observing the transformation helps to produce these models. If it is a proposed model. 31 . Virtual organization  ‘Naming Systems’ may be used to name both formal units (e. Particular technological processes produce the products of an organisation. This assists the alignment of interests and the alignment of purposes. The activities producing this transformation are the components of the transformation itself. At a higher level of resolution we can also produce a technological model for the manufacture of engines within the car company (see Figure 25). If this is a descriptive model of an actual plant. Chapter 5 Structural Models and Unfolding of Complexity  Managing Business Complexity  The transformation named in the identity statement is used as a first step to work out a hypothesis of an organization’s primary activities. a power train shop and an assembly line. customers. However. manufacturing a car requires a bodyshop. ‘isness’ emerges from people’s interactions. owners and interveners – relevant to a particular process or transformation. These activities can be influenced by the technological processes of the organisation. we are in Viplan’s Mode I. the transformation. their timing. A technological model of a car manufacturing company is shown in Figure 24. Identity and TASCOI  The concepts of identity and naming systems help people to develop a common language to improve conversations about their primary activities and organizational context. the organization itself or departments in it) and informal units like processes. and suppliers to. as well as by possible customers of. Models of these processes are what we call technological models. their location. Different customers. different geographical requirements and also time considerations may influence this decomposition as well. we are in Mode II. These are virtual organizations. In Mode II these models are produced using expert advice.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Chapter 4 Summary  Identity and Stakeholders  The identity of an organization is what it is. suppliers.g. Naming Systems: TASCOI  Naming systems was introduced as a method to relate purpose to stakeholders. the drivers of this decomposition into lower level activities may be more than technological. with their own identity. Working out the organization’s ascribed purpose by relevant viewpoints does this. Here. hence the relevance of working out who are the stakeholders of an organization. The mnemonic TASCOI permits us to work out the participants – actors. emerging from people’s actual interactions.

Where the production process requires it. 32 . One factor is the technology. Frequently. Suppliers may also influence this formation. Customers and suppliers will also influence the way in which the owners of an organization will structure their activities. We referred to these as technological models. Therefore time models may also influence the structure of an organization. and a geographic model can be produced. For instance customers’ characteristics may support the formation of primary activities focused on particular market segments. When owners consider their strategy. actors). In Mode II this kind of model will help to design the organization to carry out an organization’s strategy. like the proximity of suppliers and customers.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 24 Technological model of a car manufacturing company Figure 25 Technological model of engines’ manufacture Structural Models  Our concern is to work out the different structural factors affecting the complexity of an organization’s transformation. they have to think about the availability of skilled labour (i.e. An organization’s activities take place in time. its cost and other local factors. In Mode I a customer-supplier model will help to describe the organization’s actual market segments. it may be necessary to use the same machinery for different products or use a shift system to run over 24 hours. as is made apparent above. geography must be taken into account. therefore.

Steel Foundry .©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Examples of structural models  Technological Models  Figure 26 shows a technological model to produce the cars made by Car Co. and . the model could be used to show inefficient distribution of markets.General Foundry . if the four divisions had existed. Customer‐Supplier Models  Figure 27 shows a model to support the ‘divisionalisation’ of a large holding that at the time had many unrelated plants. that is. This is an example of using the method in Mode II.Engineering Products. In a diagnostic mode. Figure 26 Technological Model for Car Co. 33 . the design mode. Based on the plants’ markets it was possible to see a rationale to create four divisions: .Electrical Services Each division served a distinct group of customers with as little overlap as possible.

For perishable products. or. Each must therefore be a primary activity in its own right. the time necessary to reach the market may lead to the creation of units around the country. of course. Each of these shifts must be able to produce the company’s products or service to the same standard. a shift system may be necessary.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 27 Customer–Supplier Model for Holding Geographic Models  Figure 28 shows either the growth of a supermarket from one shop into several shops or its restructuring as market opportunities made it possible to open stores in other areas. the strategic growth of an organization as the opportunities offered by new geographic markets are realised. The availability of suitable personnel and a range of other factors may also influence the siting of these stores. Figure 28 Geographic Model for Supermarket Time Models  Where a technological process must run continuously. Some goods and services are produced on a project basis. where each project lasts for a defined period and is not repeated exactly 34 .

All these are examples where time has an influence on the structure of the organization. The second example. but having different suppliers and customers and requiring differences in the activities of the actors Figure 29 Time Model for Shifts Figure 30 Time Model for Different Products Using the Same Equipment 35 . Figure 29.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System in the future. Figure 30. based on the need for the factory to work 24 hours per day. each using the same machinery. is production rotating over time. is of a shift system. The first example.

An example applying the method so far  The full connection between structural models and the unfolding of complexity is illustrated for GB Quarry. The fourth. 36 . It is part of a British construction company (GB Construction plc). The nested primary activities are then represented as circles within the larger circle. is a necessary part of the process. Different complexity drivers can influence the unfolding at different levels. it is technological activity but not a primary activity of this organization. We will look at GB Quarry to understand the positioning of structural levels within a company. The technological model for Engine 1 shows the engine making facility – a ‘would be’ primary activity – with its four ‘would be’ embedded primary activities. but the company has agreed to contract it out. This is a concrete area where strategy and structure get together. This is a British quarrying company with interests in Europe. This includes all its nested primary activities and is represented in the unfolding as a circle. The question is: which of these technological activities does the company want to make viable in its own right? The highest level in this model is engine making as a whole. The structural levels of GB Quarry relate to the transformation and suppliers and customers named in its identity. Figure 31 Technological Model and Complexity Unfolding These models and the unfolding of complexity can be carried out in both diagnostic and design modes. Therefore it is not part of the organization and does not appear in the unfolding of complexity. Trident illustrates this. Cast. In our example only three of the technological activities are translated into the unfolding.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Unfolding of Complexity  Linking Structural Models to Complexity Unfolding  The various structural models developed for an organization provide the information to discuss its complexity unfolding. In Figure 31 we illustrate how to pass from a technological model to a complexity unfolding model.

managerially autonomous. quarry based division of GB Construction plc • producing quarried products within the frameworks of the Mines and Quarries Act and the Factories Act as relevant • on an ecologically responsible basis • supplying in-house and external customers with dry and coated stone and concrete • whilst looking for new outlets for the products of quarrying through technical and market development. ensuring a return for GB Construction’s shareholders. regulators.. The owners must take into account: • the organization’s transformation. including GB Construction companies and those using products within these companies Senior management team of GB Quarry Company Ltd GB Construction plc. producing quarried and concrete products. industrial suppliers of bitumen and cement amongst others Buyers in the construction industry.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Identity Statement GB Quarry Company Ltd is: • a European. as agreed by them. that is. local authorities. ecology groups. standards bodies.. local communities through pressure groups. Environment Agency. TASCOI T A S C O I The conversion of rocks in situ into products suitable for the construction industry All employees at GB Quarry Co Ltd Landowners. Figure 32 Technological model 37 . moving downstream as necessary • to retain its position as a leading British company.

In Mode I. a diagnostic unfolding of complexity for GB Quarry is developed taking into account all these models for the recognition of structural levels. that is. Two product categories have short shelf lives – coated materials and concrete. that is. 38 .©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System • the customers/suppliers they want to service and work with. and Figure 34 Geographic model • time. the large and small users of quarried products and concrete and the input suppliers: Figure 33 Customer-suppliers model • the geographic coverage of their activities. These products must therefore be delivered in as short a time as possible. Construction takes place largely in the open. Customers are very dependent on the weather. They therefore need suppliers that can have goods on site quickly – in hours or even minutes. UK regions and other parts of Europe.

but the technologies used are different. surfacing and coating) and geographic considerations (hard east and hard west). the use and movement of equipment (plant) is determined by time. This is done in the next step of the method. the unfolding is driven by technological considerations (sand and gravel. within Central. 39 . Concrete and Roadstone frequently share the same customers.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 35 Unfolding of complexity of GB Quarry The technological process drives the first structural level. Having offered a hypothesis for the unfolding of primary activities in the organization. The product is useless if the time between its manufacture and use is too long (this is expressed by the red circles in coating). we can then look at the arrangement of regulatory functions throughout the structure. Within coating. The unfolding of complexity of GB Quarry is the outcome of four complexity drivers. It uses bitumen and stone produced by quarrying and has the road surfacing unit as one of its customers. Chapter 5 Summary  Structural Models  These are models to support decisions about the unfolding of complexity in an organization. geography or time considerations. Coating is the production of black material for roads (coated stones). hard materials. The plant must be close enough to the place where the customer will use the product to ensure it arrives in good condition. They offer a key tool to relate strategy to structure. Roadstone and Concrete unfold into ‘geographic areas’. customers-suppliers. These models can be based on technology. The second structural level is then split geographically by region. At the third level.

highly strategic resources are likely to be centralised. 40 . which give cohesion to. They can be in Mode I or II. Today it is possible to have resource centralisation and functional decentralisation. primary activities. and in Mode II when the purpose is to offer an effective distribution of discretion. In a highly centralised organization most of this functional capacity is concentrated at the global level. The table can be used in Mode I. the resources producing a primary activity are other subsumed primary activities and their regulatory functions.e. Next we will look at modelling the distribution of complexity. Geography and Time Models  It is often necessary to consider geography and time when defining the organization’s primary activities. This approach often creates bottlenecks. In Mode II these models are produced using expert advice. This is reflected in their unfolding of complexity.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Technological Models  These are models of the activities producing the transformation in the identity statement. recursive organizations) have links between functions within the autonomous units themselves. Strategies to manage this distribution of functional capacity are strategies to manage the organization’s complexity. when the purpose is to map the actual distribution of resources and discretion throughout the organization. Organizations with a functional structure are highly centralised since they depend on central people to make links between functions. In a decentralised organization the functional capacity is distributed in primary activities at all structural levels. In Mode I these models are produced by observing the transformation. In general they contain. Customer‐Supplier Models  These are models of the organization’s relations with customers and suppliers. The Recursion-Function table is a tool to discuss different strategies to manage an organization’s complexity. Communication technology may even permit the expert to make this contribution from the centre. while widely abundant resources are likely to be made available everywhere in the organization. Scarce. the primary activity. thus distributing complexity and functional capacity. What geographic coverage is required? Are shifts necessary? Is time a fundamental concern in delivering products? Chapter 6 Distribution of Discretion and Mechanisms  Distribution of Discretion  Primary activities are ‘real’ or ‘virtual’ autonomous units producing the organization’s products or services. A globally located expert can be shared by multiple primary activities and be accountable to several local managements. However. Organizations with effective autonomous units within autonomous units (i. and develop. Therefore. without the need to be physically present in all places. resource centralisation does not necessarily imply functional centralisation. and are contained within. They help to work out primary activities based on products and market segments.

Regulatory functions such as legal services. sales and quality systems are shown on the horizontal axis (see Figure 37). personnel. The vertical axis shows the primary activities of the two lowest levels of recursion for the car company.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Figure 36 Recursion and Discretion Modelling Distribution of Discretion  Regulatory functions are attributed to primary activities. finance. Production Scheduling Quality Assurance Quality System Process Development Equipment Development Maintenance Factory Logistics ► ► ► ► ► ► ► ► Machine ► ► ► ● Assemble ♦ ♦ ♦ ● Finish ♦ ♦ ● ● Figure 37 Table Recursion-Function for Engine 1 41 Goods in/out/Stores Production Management ► Buying Administration Marketing ► Sales ► Quoting Training Credit Control Finance Personnel Engine 1 Capital Expenditure Recursion Legal Function . capital expenditure.

as is sales.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Each primary activity has capacity in some functions. The Trident case study shows an unfolding of primary activities and the corresponding Recursion-Function table for a range of functions.♦. first level).●)at the intersection of the vertical and horizontal axes. the function may not be effective. The function may be completely centralised. production management. if communications are not good. the columns for those functions remain blank. Personnel functional capacity. On the other hand a number of functions of the company do not occur at all at these two lower structural levels. for instance. is only available at the level of Engine 1 (i. For example. People experience problems when there are inconsistencies in the way decentralisation is carried out. as shown for production management. these are the symbols (►. when the management of particular 42 ♦ . or completely decentralised. In our example there are resources for training. Functions may be allocated at different levels. quality assurance and maintenance in the two structural levels shown for Engine 1. or something in between the two as for Goods in/out/stores. The degree of decentralisation depends on the strategy of the organization as well as on the technologies available. or carried out by people in different parts of the organization. In Figure 38 the symbols show discretion for ‘that’ function within ‘that’ primary activity at ‘that’ level of recursion: Administration Buying Production Management Production Scheduling ● ► ● ● ♦ ♦ ■ Powertrain Engine 1 ♦ ● ■ ● ● ● ● ♦ ♦ ■ ● ► Goods in/out/Stores Marketing ● Factory Logistics Sales ► ■ ♦ ● ■ ♦ ● ● ● ♦ Maintenance Quoting ● Equipment Development Training ● Process Development Personnel ► Quality System Credit Control ● Quality Assurance Finance Car Co Capital Expenditure Recursion Legal Function Machine ■ ♦ ■ ♦ Assemble ● ► ● ► Finish ■ ■ ■ ♦ ■ ■ ■ Engine 2 ● ● ■ ► ● ● ● ● ♦ Gearbox ● ■ ■ ♦ ■ ■ ■ ■ ♦ ■ ■ ♦ ♦ ■ ■ ■ ► ● Body ♦ ♦ Assembly Figure 38 Table Recursion-Function for Car Co This functional capacity may be found within a department or just as part of an individual’s job.e. In this latter case.

which is within Powertrain. Highly specialised resources may be totally centralised. Figure 39 shows a highly decentralised structure. At the next level down it appears only in Engine 1. however. have discretion in personnel matters.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System structural levels are jumped. by-passing the managers of Powertrain. it reappears at the level of Engine 1. This may cause friction within the company and a view that personnel resources are not being used effectively. but their use may be flexible and distributed if. the personnel effort within Engine 1 may well be biased towards the needs of Finish as they. Each primary activity carries out aspects of sales relevant to that level and unit. Finish and in Body. The personnel example shows personnel management at the highest level of management in Car Co. However. the company has communication systems to link local salesmen to these specialists. Powertrain as a whole does not have functional capacity for personnel management. Personnel managers at the Car Co level can communicate easily with Engine 1 managers and will tend to do so.   Recursion Level Sales Function   GB Quarry Design of sales structure       Roadstone Sell dry and coated stone to national accounts Central Reg Hard West   Coating   Coordinate product sold at area to be produced here Surfacing East   Sell drystone to companies in area Quarry     Coordinate area salesmen Win surfacing contracts No selling activities Sell coated materials in Region Plant Deal with customer order changes Concrete Sell concrete to national accounts Western Reg Coordinate sales for the region Central Area Sell to large scale customers Minimix Sell to small customers requiring small loads       Figure 39 Sales within GB Quarry 43 . for instance. This does not mean that each primary activity at each level is carrying out duplicated activities. Distribution of a function between primary activities:  Sales. Similarly. within it. depending on the resources available and in particular on the communication channels available it is possible to argue for or against different distribution of sales capacity. within GB Quarry There is no one correct way to distribute the sales function within an organization. and not the other ‘sister’ units.

The first four stages of the method yield a number of diagnostic points and insights.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System   Diagnosis and Design of Organization Structures  This is the last stage of the Viplan Method to study organizations. The figures that follow (Figure 40) and the Trident case study give examples of how to map ‘business’ functions onto the systemic functions constituting the cohesion and development management of an organization. However. if their purpose is to create within the primary activity an appreciation of its ‘outside and then’ - support resources bargaining. based on the mechanisms for cohesion and adaptation. These systemic purposes are to: . if their purpose is facilitating the moment-to-moment alignment of operational activities. if their purpose is to bridge the communication gap between two levels of recursion. For this. it is only this last stage. Figure 40 Mapping Recursion Function Table onto VSM 44 . and the idea of recursion. we will ascribe a systemic purpose to each of these functions. In what follows we will show how the regulatory functions of the Recursion-Function table map onto the VSM.make policy for the primary activity in those functional aspects that are of competence at that level of recursion - provide intelligence capacity. if their purpose is to give ‘non negotiable’ instructions to the contained primary activities - make monitoring of primary activities possible. that provides the opportunity to think systemically in order to diagnose and design desirable structures. and - enable coordination among primary activities. without interfering in those aspects related to their main purpose. if their purpose is to negotiate the allocation of resources to primary activities - support corporate intervention.

Car Co has centralised resources that support its total management. Body and Assembly (i. Financial management has three systemic purposes in this table. Personnel. For instance the legal function both understands Car Co’s external legal environment and ensures that the law is complied with through corporate intervention. Monitoring occurs through the central personnel team’s visits to Car Co’s units. Credit control. ■ ■ ■ Resource Bargaining ♦ ♦ ■ Monitoring ♦ ■ ■ ■ ■ ■ ♦ ■ ■ ♦ ■ ♦ ♦ ♦ ♦ ♦ ♦ ■ ♦ ♦ ■ Coordination ■ ■ ■ ♦ ♦ ♦ ♦ ■ ■ ♦ ♦ Figure 41 Systemic Functions and the Mapping of the Recursion Function Table onto VSM Car Co shows some form of distribution of resources between cohesion and intelligence. primary activities within Car Co).e. Dealing with long-term financial requirements is intelligence.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Car Co  In this page our focus is on the discretion that Car Co is taking away from the rest of its embedded primary activities. which is resource bargaining and audit that is monitoring. Finance covers budgeting. The systemic purposes ascribed to these resources are mapped onto the lower grid. However. provide intelligence. whether the requirement of balance between these two systemic functions is achieved depends on specific issues and can only be assessed with reference to them. coordinates the company and provides a centralised service. From time to time Personnel gives direct instructions on labour regulations to the primary 45 Goods in/out/Stores ► ► Factory Logistics ♦ ■ ♦ ● Maintenance Corporate Intervention ■ ■ ■ Equipment Development ■ ■ Process Development Intelligence ■ Quality System ■ Quality Assurance Policy ► ♦ Production Scheduling ► ► ► ● Production Management Training ● Buying Personnel ● Administration Credit Control ► ● Marketing Finance ► Sales Capital Expenditure Car Co Recursion Quoting Legal Function ■ ♦ ♦ . through its appreciation of future trends in the labour market. as a common system. They also contributes to the resource bargaining process through a view on the company’s labour needs and coordinates through common personnel systems. Capital expenditure has a strong element of intelligence plus aspects of coordination. The purposes ascribed to them are offered only as a means to think systemically about them. The use of standard financial systems is helping coordination of Powertrain. Their systemic meaning may change from situation to situation.

Administration is a function to coordinate the factory. Factory Logistics both coordinates and monitors whilst the Goods In/Out coordinates the flow of production. In Figure 42 the systemic functions are illustrated in a VSM diagram. On the other hand Process Development provides intelligence. the management of Powertrain is only involved in the manufacturing process. restricting local autonomy. the diagnostic mode. Those working here do not have direct input into the resources bargaining of the company but support the process. In Figure 41 the systemic purposes ascribed to these resources were mapped onto the yellow grid. Production Management shows all aspects of cohesion management. Figure 42 Car Co. The Quality System is coordinating and monitoring. Sales also span all intelligence and cohesion functions at the Car Co level. these instructions are corporate intervention.: Transferring Systemic Functions from Recursion Function Table to VSM Powertrain: Systemic functions of a primary activity at the second level of  recursion in Car Co. Buying in Car Co shows a high level of corporate intervention. the symbols shown for policy are for those functions that ‘de facto’ influence the policy of Car Co. Equipment Development is also an intelligence function. with Process Development as an intelligence function. Production Scheduling 46 . monitoring and coordination. the functions at Car Co level are mapped onto a VSM diagram. This includes aspects of corporate intervention. However. that is.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System units. The buying department monitors and coordinates buying throughout the company and keeps up to date with potential suppliers. Their systemic meaning may change from situation to situation.   The functions at Powertrain level also show a distribution of discretion between cohesion management and intelligence (see Figure 43). The purposes ascribed to them are offered only as a means to think systemically about them. concerned with product and process development. Training also provides coordination and monitoring. In Mode I. We can then transfer the systemic functions onto the VSM. Production Management is concerned with the cohesion of Powertrain’s production processes. They define those aspects that are considered of corporate competence at that level of recursion. resource bargaining.

Engine2 and Gearbox.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System enables the coordination of production processes between units Engine 1. Cohesion management takes place at all levels of recursion. corporate intervention. Figure 43 Powertrain: Transferring Systemic Functions from Recursion Function Table to VSM Look at Trident for more examples. 47 . Quality Assurance and the Quality System are mainly involved in coordination and monitoring. Maintenance provides coordination and monitoring of machinery. Cohesion Mechanism  The cohesion of Car Co is affected by a number of regulatory functions as shown in Figure 44. Factory Logistics and Goods In/Out/Store provide a coordinating function.. These functions can be mapped onto the VSM. It is important to see them in relation to the primary activities they are managing. If any of them is missing or is lacking resources the viability of Powertrain is going to suffer. Figure 44 Cohesion Functions and Mechanism for Car Co. monitoring and coordination (This dynamic interrelation cannot be appreciated in Figure 44). This shows the use of the Recursion Function Table to highlight diagnostic points about an organisation. You are directed to the equivalent of Figure 44 in the Viplan Software to recognise the cohesion mechanism as a management loop interrelating resources bargaining.

Figure 45 Communications among seven cohesion functions  Further examples of aspects of cohesion management are shown for the Trident. local personnel costs. Heavy Pressing and Operator levels of the Viplan Software. Production Management has an overview of the relative production needs of the three units in relation to the overall production plans of Car Co. These three functions can be seen (in Figure 45) working closely together. those in this function take part in the negotiations between the Car Co (overview) level and the three primary units. With expert knowledge on. In this example we see Quality working closely with Production Management. We examine in Figure 45 the resource bargaining process for the distribution of personnel between the primary units to illustrate how these functions may work together. but personnel has put a unilateral halt on recruiting. Those specialising in finance function have the best knowledge of Car Co’s financial position and can bring this into the debate. Light Pressing. (A corporate intervention. 48 . From this table it is apparent that the seven functions shown in the cohesion box together manage the cohesion of Car Co. Mechanism for Adaptation  In Mode I the adaptation mechanism is intended to diagnose the balance between development management and cohesion management in each primary activity. for example.) Thus it may be that Personnel are closer to Finance than Production Management. Each is concerned with a different perspective of the company. illustrating diagnostic points that can be drawn. Buying as a separate entity with little interaction with the others. Components. Personnel take part in this resources bargaining process. (Each unit contributes its local understanding of the process). Sales interacting mainly with Personnel and Finance and Legal influencing all other functions.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System     Throughout this page you may wish to refer to the distribution of systemic functions for Car Co in the Recursion-Function table.

with reference to specific policy issues. Maintenance and equipment development are also well linked. This orchestration is often issue related. How these communications occur varies from organization to organization. The mechanism for adaptation tells us that achieving good communications should be a major concern of the primary activity’s policy function. Marketing and sales in Car Co are two parts of the same department. Different policy issues emphasise the need for different rich interconnections between cohesion resources and between intelligence resources. As with any other systemic 49 . Furthermore. intelligence and cohesion must be richly connected. The cost of this arrangement is likely to be: technology with poor grounding in the market. the resources in each of the systemic functions come from the Recursion-Function table. Figure 46 Overlap between Cohesion and Intelligence resources  The example in this page shows typical communication problems between regulatory functions. will trigger some policy issues. However production and process development are on a separate site. Hence it is relevant the creation of a balanced interaction between these resources within the organization. The integration of all the functions is not taking place. whilst ignoring others. In Figure 47. Again. from the perspective of managing complexity the main role of Policy is to orchestrate necessary debates and conversations between intelligence and cohesion resources.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System The regulatory functions of the Recursion-Function table are transferred to the relevant parts of the VSM. Poor communication leads to poor decision-making (see Figure 46). As explained in Chapter 3. Without these connections each part of an organization will pull in a different direction. we can expect that the orientation of existing resources – the ‘inside and now’ or the ‘outside and then’ – and the quality of their interactions. as made apparent in Figure 46. Policy should be aware of how different ascribed purposes will influence the need for different communications between those representing cohesion and adaptation requirements. production processes not aligned with equipment and markets with no satisfactory products. Those focused on the ‘inside and now’ map onto cohesion management and those focused on the ‘outside and then’ onto intelligence.

A significant factor is their degree of awareness about the primary activity’s purposes and values. they should develop awareness of the systemic purposes of existing resources. Often these resources emerge from within the organization by default and not by design. In Mode II we work. It helps to design the mechanisms of cohesion and adaptation. Vertically. the table has all relevant functions as recognised by people in the organization. often through Identity Workshops. Diagnosing problems  The table allows diagnosis of structural problems. Autonomy and Discretion  Each primary activity is by definition an autonomous unit. the table has all the relevant primary activities. and they are the same as existing resources for intelligence and cohesion. Designing Organization Structures  The table offers a template to discuss organizational development and transformation. Intelligence and Policy   Chapter 6 Summary  Recursion‐Function Table  This is a tool to model the discretion of each primary activity. Should any of these conditions fail. they have different levels of discretion. They are intended to be viable systems. Each level takes functional responsibilities that it takes away from its embedded primary activities. towards this awareness. policy requires resources of its own to be effective. In Mode I we diagnose these aspects. It helps us to see the balance between centralisation and decentralisation. Figure 47 Interactions between Cohesion. their ability to steer the primary activity may be impaired. In Mode II it is a tool for organizational design. Once mapped onto the VSM mechanisms it helps diagnosis of cohesion and adaptation problems. 50 . Also.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System function. In the horizontal line. However.

The Recursion-Function table helps this type of accounting. costs and benefits of maintaining a primary activity within a larger organization. we have offered the practice in this second part. consistent with the stakeholders’ strategies. In the end we need to think about the requirements to keep each primary activity viable. they need to understand the trade-offs. There is still much to be done to produce a proper accounting system. interests and concerns. However.©Syncho Research 2008 “Viplan Method” Overview of the method as developed in Viplan Learning System Conclusion: Recursion and the Viplan Method: Accounting for Viability  We have illustrated the five stages of the Viplan Method. the Viplan Method offers a first step in this direction. however. Once there is agreement about a complexity unfolding. it is possible to work out the resource implications of this unfolding. 51 . Based on the theory of viability as developed in the first part. The method offers a structured way of thinking about the management of complexity in an organization. and this can only be done by those responsible for this primary activity.